US Judge in Ooki DAO Trial Orders CFTC to Serve Original Founders With Lawsuit

Federal Judge William Orrick said he did not previously know that Tom Bean and Kyle Kistner were current token holders at Ooki DAO.

AccessTimeIconDec 13, 2022 at 1:08 a.m. UTC
Updated May 9, 2023 at 4:04 a.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

A federal judge has ordered the Commodity Futures Trading Commission (CFTC) to serve Tom Bean and Kyle Kistner with its lawsuit against Ooki DAO.

Bean and Kistner are the founders of bZeroX, a company that allowed its users to trade crypto derivatives products in the U.S. Bean and Kistner converted the company into a decentralized autonomous organization (DAO), which eventually rebranded to Ooki DAO.

  • New York State’s Attorney General Sues Former Celsius CEO Mashinsky
    04:35
    New York State’s Attorney General Sues Former Celsius CEO Mashinsky
  • FTX's Celebrity "Brand Ambassadors" Named in Class Action Lawsuit
    01:16
    FTX's Celebrity "Brand Ambassadors" Named in Class Action Lawsuit
  • Tom Brady, Gisele Bündchen and Other Celebs Named in FTX Lawsuit
    08:22
    Tom Brady, Gisele Bündchen and Other Celebs Named in FTX Lawsuit
  • Kim Kardashian Likely to Win EthereumMax Investor Lawsuit: Report
    03:16
    Kim Kardashian Likely to Win EthereumMax Investor Lawsuit: Report
  • While the CFTC settled charges with Bean and Kistner, the agency also brought separate charges against Ooki DAO, alleging it conducted similar illegal conduct to bZeroX. Members of the crypto industry tried to push back against the CFTC's approach, however. While the regulator wanted to serve its lawsuit to the entire DAO at once by posting the suit in a Help chat bot and on a web forum, industry participants argued the CFTC should identify actual members of the DAO and serve them directly instead.

    The U.S. District Court for the Northern District of California held a hearing on the matter last week. While District Judge William Orrick did not make a ruling on that day, on Monday he ordered the CFTC to serve the same suit to Bean and Kistner.

    "At the hearing, the CFTC asserted it knew that some of Ooki DAO’s Token Holders reside and conduct business in the United States because the two founders of Ooki DAO’s predecessor entity, bZeroX LLC, are Token Holders who reside in the United States. This was new information to me," the judge wrote. "Neither the complaint nor the CFTC’s Motion for Alternative Service mention that the former founders, Tom Bean and Kyle Kistner, are or have been Token Holders."

    One of the issues at question is whether the DAO is aware that it has been served with a lawsuit. Orrick, both in comments during last week's hearing and in Monday's order, said he believed the DAO is aware, though he did not explicitly say whether he would rule that the CFTC has satisfied all of the arguments it needs to in order to serve the DAO.

    "To provide the best practicable notice, the CFTC should serve at least one identifiable Token Holder if that is possible. I will delay entering that order until the CFTC has made that attempt," Orrick wrote.


    Disclosure

    Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

    CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

    Nikhilesh De

    Nikhilesh De is CoinDesk's managing editor for global policy and regulation. He owns marginal amounts of bitcoin and ether.


    Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.



    Read more about